Distributional implications of income tax evasion in Greece, Hungary and Italy

Publication type:

Research Paper

Series Number:

21465

Authors

Manos Matsaganis, Dora Benedek, Maria Flevotomou, Orsolya Lelkes, Daniela Mantovani and Sylwia Nienadowska

Publication date

1 Jun 2010

Summary

Even though tax evasion has been the focus of a growing volume of research in recent years, the issue of its distributional impact is still relatively neglected. This paper is an attempt to analyse empirically the implications of tax evasion in terms of inequality, poverty, redistribution and progressivity of the income tax system in Greece, Hungary and Italy (three countries featuring an extensive informal economy). The paper applies the discrepancy method, i.e. compares two sets of data, household budget surveys and income tax returns, to derive ratios of under-reporting by income source and geographical area. The tax-benefit model EUROMOD is used to estimate the distributional impact of tax evasion comparing household disposable incomes to a full compliance counterfactual.

Subjects

Microsimulation and Taxation

Links

http://ideas.repec.org/p/pra/mprapa/21465.html